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HANDOUT ( ECO SANJIV VERMA)

1. US CRISIS 2008 & 2011

2. EURO ZONE CRISIS3. CYPRUS CRISIS

4. DIFFERENT ACCOUNTS BY NRIs

5. ECONOMICS OF ANIMAL REARING

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concessions given effective December 2012, resulting in a fiscal cliff, of the relative

inability of the government to reduce spending and also raise taxes, in the wake of the

growing un employment rates and marginal growth of the US economy. The US govt

has to cut expenditure by USD 1.2 trillion over a 9 year period beginning December

2012. In view of the fiscal cliff, US congress has further extended suspension of the

debt ceiling till May 19, 2013. The fiscal crisis of the US has not been resolved but only

postponed and the fiscal cliffwould resurface in May 2013.

2. EURO ZONE CRISIS

Earlier European Union represented one economic market as an economic union with

free trade with each other. The Euro Zone came into existence with the signing of

Maastricht treaty signed in 1992, of a monetary union, one Central bank and single

currency, replacing country specific currencies in the European Union. As a result The

Euro as common currency came into existence in 2002, but of the 27 member countries

only, 17 members of the EU accepted Euro as the common currency and became partof Euro Zone.

Some of the members not opting for Euro (10) especially Sweden, UK, Switzerland

which while accepted Euro, also had their own respective currency and not part of the

Euro zone even though part of European Union. There are 6 other countries which have

Euro as their currency but are not part of the Euro zone resulting in 23 countries in the

world having Euro as their currency with 17 as part of Euro Zone.

The Euro zone had structural problems ever since it came into existence:

a) Of a union of dissimilar economies, difference in sizes, economic activities,

resources, technology, levels of development and incomes. On the one hand the

stronger economies of Germany, France and Italy and the other peripheral

economies like Greece, Portugal, Spain etc.

b) Some of the Euro Zone member had strong currency before Euro came into

existence like Deutsche Marks (Germany), French Francs and the Italian Lira,

while other had a weak currency like Greece (Drachma), Portugal (Escudo) and

Spain (Peseta). Thus monetary union was not across similar monetary strengths

of economies.

c) The larger economies especially Germany had a current account surplus while

others had a current account deficit largely with Germany.

d) There was a Growth with Stability Pact amongst Euro zone members which

was more of an understanding rather than a fiscal union of debt to GDP not

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exceeding 60% and deficit to GDP of not exceeding 3%, which was never

adhered to by the member countries resulting in fiscal excesses, high levels of

deficits resulting in large borrowings especially by what is referred as PIGS

economies, comprising of Portugal, Ireland, Greece and Spain.

The Euro Zone crisis is a Soverign debt crisis as it is government debt outside the

country. (please refer to slides uploaded for class 8 & 9)

3. CYPRUS CRISIS

The Crisis Cyprus is a banking sector crisis, with volume of business many multiple of

its GDP, unregulated, high exposure to Greek bonds almost resulting in collapse of the

second largest bank necessitating a bail out by European Central Bank.

4. NRI - NRE/ NRO/FCNR a/c

NRE NRO FCNR(B)

Which NRIsAll (except Residents of Nepal/Bhutan)

R/O Pakistan, Bangladesh require prior approval of RBI

Currency Rupee denominated

Any convertible

currency

USD/GBP/Euro/Ye

TypeSavings, Current or a Fixed / Term

Deposit

Term deposit

(1-5 years)

Is nomination

allowed?YES

What is the status of

the account when

NRI returns to India

for good?

Converted to resident account Redeemed

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What can be the

source of funds?

Funds remitted from

abroad, Funds from

another NRE / FCNR

account

Funds received

from within India

Funds remitted fro

abroad

Repatriation YES NO YES

Can it be opened

jointly with a

resident?

NO YES NO

What is the income

tax treatment of the

interest earned?

Tax free

Taxed as per

applicable slab

rate

Tax free

RFC(D) Account

5. ECONOMICS OF ANIMAL REARING

India is home to a large number of breeds of animals, as part of the eco system

converting waste into protein ( having multi functionality with agricultural activities

(ploughing and sowing), as means of transport of agricultural produce, their produce

used for consumption (milk), excreta providing source of energy(cow dung), directly

used for consumption and exports(poultry, meat products). Their skin used for multiple

purposes like clothing, footwear, wool, woolen wear etc (sheep, Yak).

But animal rearing in India is an informal secondary occupation. It is unscientific in

nature, as an ancillary, livelihood activity meeting requirements of rural families, their

produce over self consumption as surplus sold amongst the local population. There is

also the 70:70 feature of India, of 70% of the animals held by 70% of the rural

population, largely comprising of women and landless/small/marginal farmers in rural

areas.

It is not seen as a science, but driven more out of need, experimentation and

experience. They play a complementary inter-linked activity to farming and other alliedactivities, not allowing understanding of it being a potential source of Multiple Income

Earning Opportunity (MIEO) for the rural poor.

Cooperatives set up for milk and products through National Dairy Development Board

(NDDB), Anand Milk Union Limited (AMUL)and others represent the first attempt of

economics of animal rearing as a viable business model of not only providing means of

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livelihood but remunerative means of income enabling prosperity amongst farmers

engaged in this activity. Goat milk sale price is much higher than price of milk from

buffaloes and cows and can be seen as commercial activity.

There are significant opportunities, as standalone economic activities in areas like

processing of meat, piggery and poultry products, fish farming, animal skin andcommercial use of waste as fertilizers and also for meeting energy needs for local

community besides meeting domestic needs. There is scope for increased processing

and value addition and strong linkages with the food processing industries to establish

full economics (viability) of animal rearing. Animal rearing as an organized activity

reduces pressure on agriculture, allowing income opportunities outside agriculture but

yet connected to villages not requiring the rural population to move out for seeking

employment.

India has been the largest exporter of beef products and India is presently in the throes

of pink revolution signifying a great potential for meat products. But, this will requiremodern and automated abattoirs, greater thrust on hygiene and processing and cannot

be confined as an informal activity any more. It will also require developing local

infrastructure in terms of adequate power, refrigerated storage and transport and an

efficient logistics.

Similarly poultry hatchery, eggs are fast emerging as viable businesses given the

growing demand and changing consumption habits towards protein oriented diet

globally. Sheep and Yak rearing can provide linkages to the woolen industry.

But more than opportunities, it has number of structural issues which need toaddressed, one to look at them as sound business proposition and the other ensuring

long term viability and sustainability of this untapped area in rural areas. First it requires

dissemination of the science of animal rearing, feed and fodder, newer technologies of

breeding and cross breeding and health management.

Two, this would also require veterinary support through doctors and accessible animal

care hospitals. It is also a fact that this may a distant cry given the low level health care

for the rural human population.

Three, there is also a need to link this activity to formal sources of institutional credit and

insurance, which is linked but for specific activities only. Lending for animal rearing in

general should be included as part of priority sector lending by banks.

Fourth it will also have to contend with challenges of being a potential breeding ground

of germs, managing epidemics and human health (swine flu) associated with different

breeds and species.

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Fifth, one should be alive of the water requirement especially in processing of meat

products which require multiple washing, manifold more than that required for humans,

needing investment in water treatment plants.

Finally, with the right direction, policy support and matching inputs through adoption of

scientific methods, this relatively unknown and untapped potential has the powers tousher in a new era for rural India of livelihood means, multiple income opportunity and

improving living conditions of the rural masses.

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